George Mason_ Young

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How do trade policies and tariffs impact forex markets?

Trade policies, including tariffs and trade agreements, directly affect currency demand. Protectionist measures may weaken a currency by reducing competitiveness, while free trade deals support growth and flows. For example, U.S.–China trade tensions in 2018 triggered CNY depreciation and USD volatility. Institutions hedge exposure with options and global diversification. Retail traders can follow trade headlines to anticipate volatility in affected pairs. Benefits: understanding trade policy links geopolitics with forex flows. Risks: short-term overreaction to news often whipsaws markets. Trade policy illustrates how politics and economics merge in forex—headlines can shift sentiment instantly.